DETERMINING URBAN PER PUPIL EXPENDITURES

A comparison
between the funding of schools in city-wide urban districts and in suburban
areas can provide dramatic evidence of inequities. For example, in the largest
urban system in the country--New York City's--the 1988-89 approved operating
expense per student was $4,351. In contrast, expenses per student in the four
surrounding suburban counties was $1-2,000 higher: $6,605 in Westchester, $6,539
in Nassau, $6,189 in Rockland, and $5,852 in Suffolk.

However, because not all urban districts coincide with city boundaries, and
because per pupil expenses are calculated differently around the nation, many
urban districts show no noticeable deprivations when their per pupil expenses
are compared to those of neighboring districts.

URBAN SCHOOL FINANCING PROBLEMS

There are a variety of
important reasons for the fiscal strains experienced by urban school districts:

Structural Features in the State Aid System That Work Against Urban
Districts.

In the 1950s and 1960s, money for education was largely raised at a local
level based on property taxes, with funds from the federal government generally
used to create special programming. Since 1970s, however, partly in the hope of
reducing inequities between property rich and property poor districts, state aid
for education has increasingly supplemented local school funding. All 50 states
increased their education budgets in the early 1980s, and by 1984 states
generally funded more than 50 percent of nonfederal school costs (Augenblick,
1984).

However, several factors have diminished the effectiveness of state education
funding in equalizing the financing of school districts.

First, despite their growth, state education budgets have not kept up with
inflation. This means that states have simply not had the money to pick up the
loss of federal dollars, or to give extra money to traditionally poor school
districts. Thus, in many urban areas, the state ratio of funding remains
significantly lower than 50 percent. Of Chicago's $1.9 billion education budget,
for instance, the state supplies 42 percent, or $825 million (Byrd, 1989).

Second, "hold harmless" provisions in many states now ensure that state
attempts to allocate funds equitably will not result in less revenues for any
affluent school district; thus, state budgets actually need to be expanding for
the state to help out their poorer districts (Cardenas, 1988).

Third, even when state responsibility for city school district budgets is
growing, financial support may not keep up with the costs of increasing district
enrollments or other expenses.

Fourth, state aid to school districts is generally calculated by Average
Daily Attendance (ADA) data, which tend to discriminate against urban school
districts with high absentee rates. The New York City Board of Education (1989)
calculates that the ADA formula excludes approximately 15 percent of its
students from state aid. In fact, most urban administrators say it would be more
equitable to calculate state aid on the basis of "average daily membership"
(ADM), or a blend of active membership (enrollment) and attendance.

Fifth, even less widely used in calculating costs for state aid allocations
is an accurate population density/sparsity factor. Thus, while the state funds
110 percent of the costs of transportation in some rural areas, it funds only 23
percent of the cost of transportation in the Oklahoma City Public Schools
(Steller, 1987).

Finally, the current mood of the country is more directed towards excellence
than equality, and thus when states have additional dollars, they tend to go to
"excellence" projects, rather than to supporting the education of disadvantaged
urban students.

Increased State Control over Local Budgets.

Although states have always exercised some control over the level of
resources available for public schooling, the growth of state level funding has
been accompanied by a consolidation of state control along with a diminution of
local power to raise money or to determine how it is spent. Because each year
state monies come with different stipulations, local school officials complain
of never knowing from year to year either whether specific programs will be
refunded or how much money will be available for discretionary spending.

The Decline in Federal Dollars and the Change from Categorical to Block
Grants.

In 1981, federal block grants replaced categorical grants in 28 categories of
separate education programs. In contrast to categorical grants, which, for
example, give funding to bilingual or handicapped students, block grants can be
used for broadly defined educational purposes. Block grants offer a number of
advantages to local districts, such as bureaucratic streamlining, an end to
competition among districts for specific categorical grants, and the elimination
of the advantages that entrepreneurial districts once had over
nonentrepreneurial districts. However, many big city school districts claim that
they suffer under the block grant system. As they point out, the federal
government initially provided special services and programs because states did
not offer them. Urban districts under court ordered desegregation, for instance,
which previously had federal funds, took large cuts. Moreover, a larger
proportion of big-city revenues came from the federal government under
categorical grants (16 percent) than they now receive under block grants--8
percent (Ornstein, 1988).

The Decline in Urban Capacity for School Support.

Raising school taxes in urban areas is difficult for several reasons. In many
cities, because the development of new housing is minimal, there are fewer
options for raising property-based school taxes. In addition, city councils
often attempt to attract commercial real estate interests with the incentive of
abatements and exemptions.

In fact, in a little-discussed manner, low-income urban populations do
support their schools--and it is often the poorest urban dwellers who pay the
most. State lotteries are currently used entirely or in large part for education
in California, Florida, Michigan, New Hampshire, New Jersey, New York, and Ohio.
In New York State, for example, lottery earnings supplied $848.1 million, or 10
percent of the state education budget in 1988-89 (Gladimus, 1989).

THE EXTRA COSTS OF EDUCATING URBAN STUDENTS

Urban school
districts are likely to experience particular fiscal strain, both because they
must make expenditures not necessary in other areas and because they can secure
less for their education dollar.

Teachers in urban areas tend to be more experienced than their nonurban
counterparts, and, thus, are at the high end of the pay scale (K. McGuire,
personal communication, 1989). Moreover, many ghetto areas are forced to use
"combat pay" to attract teachers. These high salaries must be borne by cities
because state aid systems rarely include a training and experience factor for
teachers in per pupil cost calculations.

The cost of land for schools, and materials and labor for their construction
and maintenance, are higher in cities as well.

The cost of vandalism is also greater in urban areas. Although new technology
available in public schools obviously enhances education, thefts of VCRs,
computers, and software equipment have greatly increased operating costs.

Finally, a huge pressure on urban schools has been caused by the changing
composition of inner-city dwellers, especially students. Urban minority
enrollment has grown even faster than the urban minority population as a
whole--and it has been accompanied by an enormous growth in disadvantaged
students. By the mid-1980s, over 30 percent of all school-age children residing
in central cities were poor, and 70 percent were minorities (Hill, Wise, &
Shapiro, 1989).

Poor students, particularly those in high poverty areas who also suffer from
prejudice and historical deprivations, require special services if they are to
be given an equal educational opportunity. These programs substantially increase
educational costs (Murphy & Hack, 1985; Steller, 1987):

Compensatory Education: Costs 1.6 to 2.4 times more per student than a
regular school program.

Special Education: Costs 2 to 5 times as much as a regular academic program.

Language Education programs: Involves training existing staff, paying extra
teachers who speak the needed language(s), as well as providing special
curriculum, handbooks, newsletters, forms, and other materials--much of which
have to be produced by the district.

Vocational Education: Costs between 25 and 80 percent more than academic
programs.

HOW TO PROMOTE EDUCATIONAL EQUITY

The research on urban
school finance suggests that urban school districts need three things:

More Money. The Carnegie Foundation for the Advancement of Teaching (1988)
proposes a specific federal allocation aimed at urban school districts: money
for a National Urban Schools Program would be directed to the nation's 100
largest school districts. Money would be available for teacher renewal, and
curriculum and administrative innovations; and an Urban Schools Facilities
provision would make available to school districts low interest loans or
matching grants to demolish or refurbish old buildings and create more
attractive, smaller units, or to relocate in residential or commercial
buildings. Loans would also be available to rebuild science laboratories and
secure new technology.

Better Ways of Calculating Urban Students' Needs. New York's Salerno
Commission recommended a number of reforms in state aid to education (Salerno,
1988). Among them, the following have application in many states besides New
York. The current pupil calculation by Average Daily Attendance (ADA) should be
modified to reflect a blend of active membership (enrollment) and attendance.
The distribution of state aid should also reflect the extra needs of
disadvantaged and at-risk students. And each school district's ability to pay
for educational services--including regional cost differences, shifts in
property values, and the use of a poverty factor to calculate the combined
wealth ratio--should be calculated into the state aid formula.

FOR MORE INFORMATION

Augenblick, J. (1984, November). The
states and school finance: Looking back and looking ahead. Phi Delta Kappan, 66
(3), 196-201.

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